Update on the Ordubad Polymetalic Contract Area

RNS Number : 3328V

Anglo Asian Mining PLC

08 April 2019

 

Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

8 April 2019

Anglo Asian Mining plc ('Anglo Asian' or 'the Company')

Ordubad Polymetalic Contract Area

Multiple exciting targets under investigation

 $1.8 million committed for 2019 Work Programme

Anglo Asian Mining plc, the AIM listed gold, copper and silver producer focused in Azerbaijan, is pleased to provide a summary of its 2018 geological exploration activities and 2019 exploration plans at its 462 square kilometre Ordubad Contract Area ('Ordubad').  A detailed report of the Company's 2018 exploration work programme and results reported according to the JORC Code (2012) can be found at http://www.rns-pdf.londonstockexchange.com/rns/3328V_1-2019-4-5.pdf and on its website www.angloasianmining.com/operations.

Highlights

·    Highly favourable geology indicates that Ordubad may contain multiple Porphyry mineralisation systems

·    Soviet era data indicate very large mineral resources - work now underway to verify

·    2018 work programme included 5,504 surface samples collected and sent for analysis with results expected Q2 2019

·    1,488 metres of linear trenching completed at Shakardara

·    National History Museum worked at Ordubad as part of its FAMOS ore deposit research programme

·    Over 5 kilometres of roads cleared to give access to mineral deposits

·    2019 geological programme totalling $1.84 million commenced to include satellite mapping, geological mapping and sampling and circa 6,000 metres of core drilling

Anglo Asian Director of Geology & Mining, Stephen Westhead, said, "Now that Gedabek production is robust, a well-structured exploration programme to expand our mineral resources pipeline for future production is taking shape; this includes the potentially significant mineral resource wealth of Ordubad.

"Ordubad has several exciting targets all within a 5-kilometre radius.  We previously worked on two of these, Piyazbashi and Agyurt, which as independent deposits are relatively small given the level of exploration. However, it is the overall picture of how these quartz-gold-sulphide deposits fit into the larger framework of mineral deposit formation that is important. Given the known porphyry-style ore province and the identification of rock alteration consistent with this type of mineralisation, it is this model that will be further advanced utilising the latest exploration techniques. We look forward to updating the market on our progress."

Anglo Asian CEO, Reza Vaziri, said, "The work programme at Ordubad forms part of our development portfolio as a mid-tier gold, copper and silver mining company and provides us with significant potential to increase our overall resources and reserves.  Previous work has already highlighted Ordubad's potential, however, Gedabek was developed first due to infrastructure and other considerations.  It is with this background that we were delighted to approve a significant budget to facilitate an expanded geological work programme in 2019."

Ordubad Contract Area

Ordubad is in the south-eastern corner of the Nakhchivan region of Azerbaijan, an area known for its mineral potential. Small-scale historical mine development took place during the Soviet era and the region is adjacent to significant porphyry copper deposits in neighbouring countries (e.g. the Sungun copper mine, Iran). Ordubad is part of the Mikhmana-Zangezur tectonic subzone, which hosts a number of known copper, gold and molybdenum deposits.

Ordubad was a subject of Soviet era exploration and geological studies. There are 15 known mineral deposits and occurrences within Ordubad, six of which have resources classified according to the Soviet resource system. These six gold and copper-bearing deposits were later studied in more detail by the mining consultant group Behre Dolbear. Its Competent Person's Report ('CPR') was included as Part IV in the 2005 Initial Public Offering ('IPO') document of Anglo Asian Mining, which can be found at www.angloasianmining.com/investors/shareholder_info/constitutional_documents. Extracts from this CPR include:

The Soviets completed extensive technology reports on several properties. In general, the Soviets only completed technology reports on properties they considered should be developed into mining operations.  The Ordubad Contract Area is 462 square kilometres in the Nakhchivan region and contains numerous deposits, six of which have been studied by Behre Dolbear: Shakardara, Piyazbashi, Misdag, Agyurt, Shalala and Diakhchay. These deposits lie within a 5-kilometre radius. The Ordubad Contract Area also contains other significant properties with Soviet era defined resources in Yashiling, Goyhundur, Keleki and Kotam. Porphyry copper deposits of the Ordubad ore region are localised within the western part of the Megri-Ordubad granitoid massif, where the Paragachay, Diakhchay, Misdag, Gey-gel, Geydag, Goyhundur, Shalala and other deposits are found.  In conclusion, Behre Dolbear believes that thorough exploration will reveal significantly more potentially economic mineralisation than is presently known, especially in the Ordubad and Gedabek Contract Areas.

An extract from the CPR of the Soviet resources table for Ordubad is shown below. Previous attempts to replicate some of the Soviet results correlated poorly. However, it is believed that the check sampling methodology and the locations for duplication were incorrect. The tonnages of Piyazbashi and Agyurt however were broadly confirmed in previous work by the Company. 

The Company believes these resource estimates are not fully defined and it intends to carry out further work to review the source reports and then validate with follow-up field work. However, the Soviet data indicate the presence of potentially extensive mineralisation, which justifies further work.

Nevertheless, exploration targeting cannot solely rely on historical Soviet data. For example, two of the Company's three operating mines, namely Gadir and Ugur, were not part of the Soviet deposit inventory. However, modern exploration techniques and processing facilities and contemporary industry economics create a different environment today for exploration and exploitation, thus creating new exploration opportunity as compared with the Soviet era.

Ordubad Resources (Soviet Classified), extracted from Behre Dolbear CPR (2005)
Name	Category	Ore	Cu	Au	Ag	Cu	Au	Ag
		Mt	%	g/t	g/t	kt	koz	koz
Shakardara	P2	156	0.4	1.1	3.6	624	5,518	18,058
Misdag	P1	350	0.43	-	-	1,505	-	-
Shalala	C2+P1	20.6	0.5	-	-	103	-	-
Agyurt	C2+P1	1.13	1.28	6.39	23.4	15	232	850
Piyazbashi	C2+P1	0.89	-	6.6	-	-	189	-
Diakchay	C2+P1	14.4	0.44	-	-	63	-	-

2018 Exploration Programme

Main objectives

·    To assess the extent of the copper, gold and associated mineralisation potential of Ordubad.

·    To bring new mineral occurrence targets into the resource and reserve development pipeline.

·    To identify potential new areas of mineralisation and targets for drilling in 2019.

·    To determine the logistical requirements for future production.

Programme Highlights

·    Completion of a surface geochemical sampling programme covering the Shakardara and Dirnis areas, for a total area of 26.7 square kilometres, following up on porphyry-style alteration zones and surface outcrops of malachite mineralisation. A total of 5,504 samples were collected and sent for analysis to ALS Minerals 'OMAC' (ALS Loughrea) in Ireland; results are expected Q2 2019.

·    A geological research team from the Natural History Museum ('NHM') of London worked with the Company at Ordubad for two weeks in November 2018, collecting 83 samples for X-Ray Diffraction analysis ('XRD') and petrographic studies among others.

·    1,488 metres of linear trenching completed at Shakardara, with 916 trench samples collected and over 989 metres sampled.

·    42 stream sediment samples collected at Piyazbashi.

·    Detailed geological (lithological, alteration and structural) mapping completed over the 26.7 square kilometre Shakardara geochemical study area.

·    5,500 metres of road-clearing completed by bulldozer to access mineral occurrences and deposits.

·    Preliminary review of primary (where available) historical geological reports and initial target selection.

·    Drillhole planning at the copper target of Dirnis and the gold targets at Keleki.

Overview of Exploration Activity in 2018

A surface geochemical sampling campaign was completed in 2018. In total, 5,504 samples were collected over the Shakardara and Dirnis areas on a 50 metre by 100 metre grid pattern. The samples were dominantly in the form of outcrop and regolith samples. An Azeri company constructed a sample preparation facility at Ordubad for crushing, grinding and splitting the samples. This enabled the Company to only send pulverised material, representative of the primary rock or regolith samples, for assay. Pre-preparation of the samples in this manner significantly reduced freight costs to the ALS Minerals 'OMAC' laboratory in Ireland.

A research team from the NHM of London worked with the Company's exploration geologists in the assessment of the Ordubad regional geology and mineral potential for two weeks in November 2018. The NHM has a highly reputable and professional geological research unit, which forms part of a global research group studying the genesis of porphyry copper systems. This research programme is known as 'FAMOS' (From Arc Magmas to Ores), with the focus "to develop new exploration tools for mineral resources by understanding the processes by which metals are concentrated in magmatic arcs".  In consideration of this task, the NHM was keen to assess the Ordubad area given its potential for this style of mineralisation and its favourable palaeotectonic position associated with the closure of the Tethys Ocean.

A preliminary report of the field visit has been prepared by the NHM that includes information relating to the regional geological structure, geological information of outcrops visited, mineral alteration patterns, zoning features and project recommendations. This report concluded: "It is clear that the Ordubad ore region is an area in which showings of copper-molybdenum mineralisation together with other types of hydrothermal mineralisation are widespread. Mineralisation of contact-metasomatic type is also present and requires further exploration and scientific investigation."

83 samples of various rock types were collected for analysis at the NHM research facilities in London. This work is planned for 2019 and will include X-ray Diffraction ('XRD') analysis for alteration characterisation, petrological characterisation studies (microscopic thin and polished sections), and additional FAMOS studies. Following this work, the samples will be sent to an international independent laboratory for whole-rock complete characterisation analysis.

Exploration Outlook for 2019

Given the mineral potential of Ordubad, a programme of work has been developed to further understand the overall geology of the mineralisation and to commence follow-up work on the previously reported geology. A budget of $1.84 million for 2019 has been approved for this work programme. The main items budgeted for include:

·    Obtaining, translation and review of primary historical geology, exploration and technology reports.

·    Regional remote sensing utilising latest satellite technology.

·    NHM follow-up fieldwork to include mapping, drill core interpretation and further sampling.

·    Surface geological mapping and sampling, with student mapping projects in collaboration with Azerbaijani Universities.

·    Geological field work targeting other commodities known to occur, for example cobalt, to assess their future production potential.

·    Core drilling at the Dirnis copper target, Keleki gold target and other copper targets, with about 6,000 metres planned. Included in the budget is sample preparation, assaying and analysis.

·    Investment in the required geological equipment and software to perform the work, including an XRD alteration analyser, a ground magnetometer with Very Low Frequency ('VLF') capabilities for magnetic and resistivity mapping.  

·    Accommodation and geological camp upgrade.

Competent Person Statement

The information in the announcement that relates to exploration results, minerals resources and ore reserves is based on information compiled by Dr Stephen Westhead, who is a full-time employee of Anglo Asian Mining with the position of Director of Geology & Mining, who is a Fellow of The Geological Society of London, a Chartered Geologist, Fellow of the Society of Economic Geologists, Member of The Institute of Materials, Minerals and Mining and a Member of the Institute of Directors.

Stephen Westhead has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Stephen Westhead consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

Stephen Westhead has sufficient experience, relevant to the style of mineralisation and type of deposit under consideration and to the activity that he is undertaking, to qualify as a "competent person" as defined by the AIM rules. Stephen Westhead has reviewed the resources and reserves included in this announcement.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

**ENDS**

For further information please visit www.angloasianmining.com or contact:

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Bill Morgan	Anglo Asian Mining plc	Tel: [phone]
Stephen Westhead	Anglo Asian Mining plc	Tel: [phone]
Ewan Leggat	SP Angel Corporate Finance LLP Nominated Adviser and Broker	Tel: [phone]
Soltan Tagiev	SP Angel Corporate Finance LLP Nominated Adviser and Broker	Tel + 44 (0) 20 3470 0470
Isabel de Salis/Gaby Jenner	St Brides Partners Ltd	Tel: [phone]

Notes:

Anglo Asian Mining plc (AIM:AAZ) is a gold, copper and silver producer in Central Asia with a broad portfolio of production and exploration assets in Azerbaijan. The Company has a 1,962 square kilometre portfolio, assembled from analysis of historic Soviet geological data and held under a Production Sharing Agreement modelled on the Azeri oil industry.

The Company's main operating location is the Gedabek contract area ("Gedabek") which is a 300 square kilometre area in the Lesser Caucasus mountains in western Azerbaijan. The Company developed Azerbaijan's first modern operating gold/copper/silver mine at Gedabek which commenced gold production in May 2009. Mining at Gedabek was initially from its main open pit, which is an open cast mine with a series of interconnected pits.

The Company also operates the high grade Gadir underground mine, which is co-located at the Gedabek site. In September 2017, production commenced at the Ugur open pit mine, a recently-discovered gold ore deposit at Gedabek. The Company has a second underground mine, Gosha, which is 50 kilometres from Gedabek. Ore mined at Gosha is processed at Anglo Asian's Gedabek plant.

The Company produced 83,736 gold equivalent ounces ('GEOs') for the year ended 31 December 2018. Gedabek is a polymetallic ore deposit that has gold together with significant concentrations of copper in the main open pit mine, and an oxide gold-rich zone at Ugur. The Company therefore employs a series of flexible processing routes to optimise metal recoveries and efficiencies. The Company produces gold doré through agitation and heap leaching operations, copper concentrate from its Sulphidisation, Acidification, Recycling, and Thickening (SART) plant and also a copper and precious metal concentrate from its flotation plant. A second dedicated crusher line has been commissioned and is now in operation for  the flotation plant to enable it to operate independently of the agitation leaching plant.

The Company has forecast metal production for FY 2019 of between 82,000 to 86,000 gold equivalent ounces ("GEOs"). Of the forecast production for FY 2019, between 28,000 to 30,000 GEOs is in the form of copper and gold flotation concentrate.

Anglo Asian is also actively seeking to exploit its first mover advantage in Azerbaijan to identify additional projects, as well as looking for other properties in order to fulfil its expansion ambitions and become a mid-tier gold and copper metal production company.

 

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